China turns to imported copper blister, cathode while scrap loses luster in 2020 [CORRECTED]

China increased refined and unrefined copper imports by over 31% year on year in 2020, whereas scrap inflow shrank significantly, reflecting the import policy change for waste products that came into force at the end of the year.

Copper concentrate imports
21.77 million tonnes, down 1% year on year

China’s imports of copper concentrate, a major feed for primary smelting, dropped marginally in 2020 despite strong demand arising from expansion of copper smelter capacity. It was the first recorded drop since 2011, with supply constraints and trade disputes in the play.

Since the start of 2021, the unusually tight availability of copper concentrate has caused Fastmarkets’ benchmark copper concentrate treatment and refining charge (TC/RC) index cif Asia Pacific to set multiple new lows. At the end of January, it dipped below $40 per tonne / 4 cents per lb for the first time on record. Fastmarkets started tracking this market in 2013.

The copper concentrates TC index, cif Asia Pacific stood at $37 per tonne / 3.7 cents per lb on Friday February 5.

As for annual contracts, Freeport-McMoRan and China Copper settled the 2021 TC/RC benchmark at $59.50 per tonne / 5.95 cents per lb, the lowest since 2011.

Copper scrap imports
940,000 tonnes, down 36.9% year on year

China’s copper scrap imports in 2020 were largely constrained by stalling scrap generation due to Covid-19 lockdowns across the world.

Inflow was also great disrupted by a lack of access to import quotas granted by China’s environmental officials last summer when the industry cast much of their hopes on new guidelines for trading high purity copper scrap as renewable materials. The import protocol, scheduled to come out in July, was not released until November 2020.

The import quota system was introduced in 2019 to screen out scrap processors that fail to comply with emission requirements. It was officially abolished in January 2021 when China enacted its ban on all scrap cargo.

Cargoes deemed ineligible for reclassification as “copper recyclable materials” were rejected. The clearance risk made both suppliers and buyers reluctant to trade on the spot market, while major shipping lines refused scrap shipments to China out of fear the cargoes would not be permitted to enter the destination port.

Fastmarkets assessed No2 copper material, RCu-2B (birch/cliff), cif China, LME/Comex discount at 36-40 cents per lb on January 25, the largest discount since November 2019 when it was $38-40 per lb.

Unrefined copper (blister, anode, ingots) imports
1.03 million tonnes, up 35.5% year on year

Inflow of unrefined copper rose sharply last year when supply resumed after the major delivery disruption caused by South Africa’s lockdown in March and April ended.

In May, Fastmarkets’ spot refining charge (RC) for 98-99% blister copper on a cif China basis dropped to two-year low of $115-125 per tonne after both smelters and traders entered the spot market to fill the supply gap caused by delayed South African shipments.

The later arrivals from Africa pushed the spot RC up in the summer, and it has been staying above $150 per tonne since October 2020. Fastmarkets assessed the copper blister 98-99% RC spot, cif China at $150-165 per tonne on December 31.

As for annual contracts, China Nonferrous Metal Mining Co (CNMC), the parent company of Zambia-based blister copper producer Chambishi Copper Smelter (CCS), agreed to supply the intermediate copper product to China’s Jiangxi Copper at $145 per tonne cif China this year.

Meanwhile, Jiangxi Copper and First Quantum – operator of Zambian copper-gold project Kansanshi – were not able to agree to a deal for contracted volume.

Since last October, China has charged a value-added tax (VAT) for the gold contained in imported copper anodes despite market opposition.

Refined copper imports
4.67 million tonnes, up 31.5% year on year

There were two record-breaking months for Chinese copper imports in June (656,483 tonnes) and July (762,211 tonnes) in 2020, after a rush of buying in April and May in response to a government subsidy to stockpile base metals and an opening in the import arbitrage window.

The window opened multiple times in the first half of 2020, sending Shanghai copper premiums to five-year highs in the $120s per tonne in May.

The arbitrage largely remained in a loss in the latter half of the year, except for brief instances of profit in August and November.

Physical copper premiums clearly weakened in the second half of 2020, with copper EQ cathodes even being traded at discounts in October and December on a cif Shanghai basis.

You can hear directly from Fastmarkets reporters at The Fastmarkets Copper Seminar, happening as a free digital event on March 11-12. Register here to join them alongside some of the industry’s most important speakers including CEOs at major copper companies.

[This article was updated on February 11 to amend the full-year tonnage given for China’s copper scrap imports. This figure was erroneously listed as 94,000 tonnes when this story was originally published, it has since been corrected to 940,000 tonnes.]

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